Foreign Corporation Termination Procedures and Wrongful Dismissal — What Foreign Employers in Korea Must Know First
When a foreign corporation tries to dismiss a Korean employee, the sticking point is rarely the reason — it's the procedure.
Korea's Labor Standards Act applies equally to workplaces with five or more employees regardless of foreign capital or foreign representation, and head-office policies cannot override Korean law.
This article walks through the procedures a foreign corporation must follow when dismissing an employee in Korea, the practical points where wrongful dismissal rulings get overturned, and how to respond to remedy applications filed with the Labor Relations Commission.
Foreign Corporation Termination and Wrongful Dismissal — Korean Law Comes Before Head-Office Policy
The trap foreign employers fall into most often is the assumption that "we followed the head-office manual, so we're fine."
In practice, the moment head-office HR policy collides with Korea's Labor Standards Act, Korean law prevails.
Scope of Korean Law Applies First
Foreign-invested corporations, Korean branches of foreign companies, and liaison offices are all subject to the Labor Standards Act so long as they employ workers inside Korea.
Whether the parent company sits in the U.S., Japan, or China, the dismissal of an employee working in Korea is judged under Korean law.
In particular, workplaces with five or more regular employees fall within the scope of wrongful-dismissal remedy applications, so if the employer cannot prove just cause, a reinstatement order can follow.
When Head-Office Policy Conflicts with Korean Law
Even if the parent company says "termination is possible after a 30-day PIP (Performance Improvement Plan)," that alone does not constitute valid cause for dismissal in Korea.
In fact, if the PIP itself was a mere formality, that record often becomes evidence of wrongful dismissal.
The key point is this: head-office procedure is only one piece of the Korean procedural picture. The Korea-specific steps — written notice, opportunity to respond, and procedures under the rules of employment — must all be followed.
Just Cause for Dismissal — What Actually Holds Up in Practice
Article 23 of the Labor Standards Act simply states that "no employer shall dismiss a worker without justifiable cause."
That's where the trouble starts. The standard for "justifiable cause" is not in the statute itself but scattered across court precedents and Labor Relations Commission rulings.
Ordinary Dismissal vs. Disciplinary Dismissal
| Category | Ordinary Dismissal | Disciplinary Dismissal |
|---|---|---|
| Grounds | Personal or general circumstances of the worker | Fault attributable to the worker |
| Examples | Inadequate performance, deteriorating health, abolition of department | Embezzlement, unexcused absence, verbal abuse, leak of trade secrets |
| Procedure | Written notice + 30-day advance notice | Disciplinary committee process under the rules of employment |
| Burden of Proof | Employer | Employer |
Handling a disciplinary dismissal as if it were an ordinary dismissal creates a procedural defect; pushing an ordinary dismissal through as if it were disciplinary results in insufficient grounds.
In practice, this distinction gets blurred during the process, and these are the cases most commonly overturned at the Labor Relations Commission.
Managerial Dismissal Has Separate Requirements
Dismissals tied to restructuring, business downsizing, or a foreign parent's decision to withdraw from Korea fall under Article 24 of the Labor Standards Act (dismissal for managerial reasons).
In such cases, four requirements must all be met: ① urgent managerial necessity, ② efforts to avoid dismissal, ③ reasonable and fair dismissal criteria, and ④ consultation with worker representatives at least 50 days in advance.
In particular, when a foreign parent unilaterally notifies the closure of a Korean branch, "efforts to avoid dismissal" tends to be the weakest link in the chain of proof.
Because whether the requirements are met varies with the parent company's situation, reviewing your own company's facts requires prior consultation.
The Dismissal Procedure — One Missing Step Is Enough for a Wrongful Dismissal Ruling
No matter how clear the grounds may be, a procedural omission turns a dismissal into wrongful dismissal.
In practice, employers lose more often on procedural defects than on the merits.
Written Notice Is Where Things First Go Wrong
Article 27 of the Labor Standards Act explicitly requires that the grounds for dismissal and the timing of dismissal be communicated in writing.
| Method | Validity | Notes |
|---|---|---|
| Paper notice | Valid | Safest |
| Email notice | Conditionally valid | Confirmation of receipt by the worker required |
| KakaoTalk / SMS | Highly disputable | Risky on its own |
| Verbal notice | Invalid | Procedural violation is immediate |
In foreign-affiliated companies it is common to hear "we only sent the Termination Letter in English," but issuing it in Korean — or at least with a Korean translation alongside — is the safer route for a Korean worker who must understand it.
The grounds for dismissal should not be left as abstract phrases like "poor performance" or "lack of diligence." They should specify when, which actions, and which rules were violated.
30 Days' Advance Notice or 30 Days' Ordinary Wages
Under Article 26 of the Labor Standards Act, the employer must either give 30 days' advance notice of dismissal or pay at least 30 days' ordinary wages.
This is called "dismissal notice allowance," and the duty to pay it arises independently of whether the dismissal itself was justified or not.
Paying the notice allowance does not make the dismissal lawful — a point foreign employers very often misunderstand.
Disciplinary Procedures Under the Rules of Employment or Labor Contract
Workplaces with 10 or more regular employees must have rules of employment filed with the Ministry of Employment and Labor, and the composition of the disciplinary committee and the procedures for providing an opportunity to be heard must be specified within them.
If the rules of employment state that "the disciplinary committee shall be notified 7 days in advance, with an opportunity to submit a written explanation," skipping even one step is a procedural violation.
This is a Korea-specific procedure that doesn't appear in any head-office manual, and it's the one most frequently omitted when a foreign representative handles the matter directly.
Caution: Even when the grounds are valid, failing to provide an opportunity to be heard is enough to confirm wrongful dismissal. This is the most common pattern in Labor Relations Commission rulings.
Confirm Exact Procedures and Costs in a Pre-Consultation
If a single dismissal is overturned as wrongful, a chain reaction follows — back-pay obligations, reinstatement, and reputational damage.
Costs vary by case, so we provide accurate guidance during the free consultation.
Request a free consultation now → 02-363-2251 / KakaoTalk: alexkorea
Wrongful Dismissal Remedy Applications — Handling the Labor Relations Commission
A dismissed worker may file a wrongful-dismissal remedy application with the competent Regional Labor Relations Commission within three months from the date of dismissal.
From the employer's standpoint, those three months are the most nerve-racking window.
The Labor Relations Commission Process
| Stage | Content | Timing |
|---|---|---|
| Filing of application | Worker submits the application | Within 3 months of the dismissal date |
| Investigation | Investigator gathers materials and statements from both sides | About 30–60 days |
| Hearing | Public-interest, worker, and employer commissioners deliberate | 1–2 sessions |
| Decision | Wrongful dismissal upheld / dismissed | Roughly within 60 days of filing |
| Reconsideration / administrative litigation | National Labor Relations Commission review, administrative court suit | Additional months |
Most cases are decided in a single hearing, so the answer brief and evidence prepared in advance determine the outcome.
Evidence Employers Most Often Overlook
Attendance records, work-instruction emails, warning letters, PIP evaluation sheets, and coworker statements are the core evidence.
The problem is that employers only start gathering materials at the point of dismissal.
If you've handled performance issues only verbally without keeping records, there is almost nothing left to prove your case at the hearing.
When this side is weak, even genuine grounds can end up ruled as wrongful dismissal.
Consequences for the Employer if Wrongful Dismissal Is Confirmed
If wrongful dismissal is confirmed, the employer faces ① a reinstatement order, ② payment of wages equivalent to the dismissal period, and ③ enforcement fines for non-compliance.
If the worker does not wish to be reinstated, this can be replaced with a monetary compensation order, but the amount is set above the equivalent wages.
In a recent comparable case, a parent company that took Korean law too lightly saw the back-pay liability accumulate into a heavy burden.
Additional Issues When Dismissing Foreign Workers (E-7, D-8, etc.)
When dismissing a foreign employee, visa issues must also be on the table.
The end of an employment contract directly flows into a question of residence status.
Duty to Report Status Changes
Under HiKorea procedures, the employer must report the termination of an employment contract with a foreign worker to the Immigration Office within 15 days.
Missing this report results in administrative fines on the employer and accumulates disadvantages for future foreign hiring.
Job-Seeking Period for Dismissed Foreign Workers
Holders of work visas such as E-7 or E-9 lose their residence status if they fail to find a new position within a set period after the employment contract ends.
This period varies by visa type and residence status, so the exact standard for any given case should be confirmed with the competent Immigration Office.
From the employer's side, recognize that dismissing a foreign employee directly leads to a visa issue, and handle both the labor-law issue and the immigration issue at the same time.
Pre-Check Checklist for Foreign-Affiliated Employers
- Are the rules of employment filed with the Ministry of Employment and Labor?
- Do they explicitly include provisions for forming a disciplinary committee and granting the opportunity to be heard?
- Are attendance, work instructions, and warnings being routinely documented?
- Can the termination notice be prepared in Korean, or with Korean translation alongside?
- Is there a plan for either 30-day advance notice or payment of the notice allowance?
- For foreign employees, has the immigration reporting procedure been reviewed in parallel?
- Have the conflict points between head-office HR policy and Korean law been resolved in advance?
Practical Tip: Rather than fitting the procedure after the dismissal decision is made, the defense against wrongful dismissal starts the moment dismissal becomes a possibility — keep records from that point on.
Frequently Asked Questions
Q1. If head office decides to withdraw the Korean branch, can we dismiss all employees?
It is possible, but all four requirements for managerial dismissal must be satisfied — urgent managerial necessity, efforts to avoid dismissal, fair criteria, and consultation 50 days in advance.
A head-office decision alone does not automatically establish "urgent managerial necessity"; the financial and operational state of the Korean branch must be separately proven.
Q2. Is an English-only Termination Letter valid?
If the worker can clearly understand its content, there is room to recognize its validity, but in a Labor Relations Commission dispute, notice with a Korean translation alongside is substantially safer.
For Korean-national employees in particular, Korean notice is the rule.
Q3. Can we freely dismiss employees during the probationary period?
Even during probation, dismissal without justifiable cause can still be ruled wrongful.
That said, if the evaluation criteria were communicated in advance and the assessment was objective, the recognized scope is somewhat broader than for ordinary dismissals.
Q4. We paid the dismissal notice allowance — what happens if it's still ruled wrongful dismissal?
Payment of the notice allowance and the validity of the dismissal are separate matters.
If wrongful dismissal is confirmed, you must pay wages equivalent to the dismissal period on top of the notice allowance already paid.
Q5. Does the foreign representative have to personally attend the Labor Relations Commission hearing?
Representation by an authorized agent (certified labor consultant, attorney, or administrative agent, within the scope of the mandate) is possible, but where factual statements are required, attendance by the representative or HR officer may be requested.
If language is an issue, the question of bringing an interpreter should also be settled in advance.
Q6. If we process it as a recommended resignation, does the wrongful dismissal issue disappear?
If the worker voluntarily submits a resignation letter, it is not a dismissal, and the wrongful-dismissal issue is no longer in play.
However, if circumstances surface showing the employer coerced the resignation (recordings, messages, coworker statements), it can be judged a "constructive dismissal" and overturned as wrongful dismissal.
The line here is one of the most frequently contested in practice.
Need Expert Consultation?
Once a foreign-affiliated corporation's dismissal dispute enters the Labor Relations Commission, the burden accumulates on the parent company, the Korean branch, and the worker alike.
VISION Administrative Office has handled HR and labor procedures for foreign-invested corporations for many years, and we advise step by step from pre-dismissal review to Labor Relations Commission response.
Costs vary by case, so we provide accurate guidance during the free consultation.
VISION Administrative Office — Service Information
- Firm: VISION Administrative Office
- Phone: 02-363-2251
- Email: 5000meter@gmail.com
- KakaoTalk: alexkorea
- Address: 3F, 324 Toegye-ro, Jung-gu, Seoul 04614 (Seongwoo Building)
From establishing foreign corporations and handling HR/labor matters to managing dismissal procedures, responding to wrongful-dismissal remedy applications, and coordinating foreign visa matters (D-8, E-7, and more), we bring it all together in one place.
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